Photo: COREVEST FINANCE ANTIOCH / Courtesy
The increase in interest rates by the Federal Reserve has meant that Americans are afraid to acquire housing debt. According to the Mortgage Bankers Association, mortgage applications fell 8.1% compared to the previous week.
The organization noted that the interest rate for a 30-year fixed-rate mortgage contract with loan balances of $647,200 or less increased from 4.27% to 4.50%. Additionally, the points rose from 0.54 to 0.59 for loans with a 20% down payment.
This situation had an impact on applications to refinance a loan decreased by 14% compared to the previous week. In addition, this represents 54% less than a year ago. The refinancing share of mortgage activity decreased 44.8% of total applications, compared to 48.4% the previous week.
According to a CNBC report, mortgage experts are beginning to revise down their home sales forecasts due to rising interest rates. the rise of rates is profoundly undermining housing can be affordable.
The housing market at this time has an imbalance between supply and demand, which is putting upward pressure on prices in practically the entire country.
“The jump in rates comes as markets moved to price in a much faster pace of rate increases, as well as expectations of fewer MBS purchases from the Federal Reserve,” said Mike Fratantoni, MBA chief economist. , according to CNBC.
Mike Fratantoni added that the MBA’s new March forecast expects mortgage rates to continue to trend upwards over the course of 2022. The expert added that this trend it will severely hit the lower-income sectors that seek to acquire housing through government programs.
“First-time home buyers, who rely on these government programs, are increasingly facing rapidly rising home prices and higher mortgage rates,” added Fratantoni.
What Fratantoni said ties in with a Bank of America (BofA) report from last week, since the financial institution currently affirmed those seeking to acquire a home They have prices like this that are not affordable at alla situation that makes Americans think twice before buying a property.
Alexander Lin and Jeseo Park, analysts at the financial institution, reported in a BofA Global Research note that potential buyers face very high initial payments, which makes it difficult for them to acquire a property.
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